This Week in Geopolitics

Pearl Harbor, 75 Years Later

Wednesday will be the 75th anniversary of the attack on Pearl Harbor. It happened three-quarters of a century ago, but it remains the defining moment of our time. It continues to inform the way we look at the world, and it triggered a redefinition of the federal government that still haunts us in some ways.

That day—the way it happened and the manner in which we responded—redefined the United States… a redefinition that we still struggle with today.

The World Before the Attack

The origin of the attack was Japan’s extraordinary rise. When Commodore Matthew Perry forced Japan into trade relations with the United States in 1853, Japan was a society driven by animal and human muscles. There were no steam engines or railroads or any powered industry.

By 1905, the Japanese navy defeated the Russians, and Japan was rapidly emerging as a major industrial power. Japan’s great weakness was that it was devoid of mineral resources. It had to import almost all the resources an industrial society needed.

In order to sustain its industry, Japan had to deal with China, the Dutch East Indies, and Indochina. All three were under some degree of control by European powers. The Dutch East Indies (Indonesia) belonged to the Netherlands, Indochina belonged to France, and all major European powers plus the United States controlled much of coastal China. These were Japan’s economic competitors.

Over time, Japan became less and less economically secure, and in the 1930s, it invaded China. The US opposed the invasion as it did not want to face a Japanese challenge in the Pacific. It supported Chinese resistance against Japan.

The decisive moment came when Germany occupied France and the Netherlands in 1940. Japan had agreements with both countries about deliveries of minerals from their colonies. Now, the question became whether the colonial authorities would honor the agreements. The United States did everything it could to undermine the agreements. For example, President Franklin D. Roosevelt ordered his agents to buy up oil in today’s Indonesia to keep it out of Japanese hands.

Japan invaded Indochina to secure resources there. The US was a major exporter of oil and scrap iron to Japan, and it imposed an embargo. The Japanese had an oil reserve of a few months and no way to obtain more oil. The US demanded Japan withdraw from Indochina and China. Japan feared that if it agreed, the US would control Japan’s future.

Japan had to secure its control of Indochina and the Dutch East Indies. If it did that, US submarines operating out of the Philippines would still block the supply lines back to Japan. There was no way to occupy the areas it wanted without taking the Philippines, and that meant war with the United States.

The Americans anticipated a Japanese attack on the Philippines and planned to respond by sailing the US fleet out of Pearl Harbor. The US would force the Japanese navy into a decisive battle and destroy it, recapturing the Philippines.

Planning and Miscalculations

The Japanese knew of the American plan and knew that if the US chose the time and place of the engagement, they might lose. Therefore, Japan did what the US thought was impossible. It attacked Pearl Harbor from the north with aircraft carriers. The US fleet was crippled. It would be years before it could mount an attack against Japan. Meanwhile, Japan created a Pacific empire to block the inevitable US counterattack.

The Japanese assumed the US would negotiate a peace treaty. The US didn’t. The United States could not accept a challenger who might seek control of the Pacific. And in the long run, if the US accepted the cost of war, US industrial power would crush the Japanese. It did.

Note, the United States was using a strategy that has now become commonplace—the use of economic sanctions to try to compel another nation to change its behavior. It also revealed the problem with this strategy. First, the embargo might not be effective. Second, if there were an embargo, the target nation might choose war over capitulation. Thus, a strategy designed to avoid war through economic measures could result in war.

The United States expected a Japanese attack, but it didn’t anticipate that it would be at Pearl Harbor. An attack elsewhere could be reversed if the fleet at Pearl Harbor was intact. The miscalculation was threefold. First, the US did not think the Japanese would risk bringing their fleet within 300 miles of Hawaii in winter, from the freezing north through Pacific storms. Second, the US didn’t believe that carrier aircraft could sink battleships (in spite of a similar British attack on the Italian navy). Third, it believed that Pearl Harbor was too shallow for torpedo attacks. The US underestimated Japan’s daring, its naval air power, and its technological capabilities.

The US also suffered from complacency at all levels. Navy Lt. Kermit Tyler was on duty as watch officer the morning of Dec. 7. A radar operator informed him that aircraft were approaching from the north. In what has become a legend in the world of intelligence, he replied, “Don’t worry about it,” and didn’t sound the alarm.

Complacency and the underestimation of the enemy permeated all levels of US thinking. The US had pushed Japan into an untenable position and knew that it would strike, but never assumed that it would strike at the one place where the US didn’t want it to.

(Unforeseeable events can happen at any moment—that’s true not just for the world at large, but also for investing. So let me mention as a quick aside that my friends at Mauldin Economics have a great offer for those who want to protect and grow their assets in these turbulent times. See the bottom of this week’s issue for more details.)

The Legacies of Pearl Harbor

After the war, complacency was replaced by obsessive alertness. There is a place in Colorado Springs called NORAD (North American Aerospace Defense Command), where obsessive alertness became a religion. NORAD waited and watched 24/7 throughout the Cold War and continues to do so today… constantly aware of Kermit Tyler.

No scenario is too preposterous, no moment is totally secure, and any attack can come at any moment from any direction. This is not an irrational view. It is also one that changed the US permanently.

Pearl Harbor taught the United States that it could be destroyed by complacency. The US can be surprised (as it was on 9/11), but it constantly remains on the edge of its seat, never again as secure as it was on Dec. 6. This is one of the legacies of Pearl Harbor.

There was another, more transformative legacy. After Pearl Harbor, the United States had to build a vast military apparatus to face Germany and Japan simultaneously. To do this, the federal government had to virtually nationalize the economy. The flow of material, the allocation of personnel in factories, and the control of production of civilian goods were all decided by government planners. Civil liberties—from the rights of Japanese-American citizens to freedom of speech—were curtailed.

A religion of secrecy was imposed where vast areas of knowledge, mostly unimportant, were deemed vital to national security and controlled under a layered apparatus. The United States saw itself as fighting for its life, and few objected to the extension of the federal government’s power. But it changed American society to this day.

Reshaping the State’s Relationship to Its People

In many ways, the New Deal set the stage, but it really failed to achieve its end—the end of the Depression and the increase in federal power. It was World War II that did that, in ways that had been unthinkable before. The federal government changed its relation to society. It went from being a significant but distant part of life, to controlling even small details of ordinary life.

War was not a cover for this. There was a war, and the creation of a strong state to fight this war was inevitable and gave a sense of security. The state receded after the war but never went back to what it had been before. It remained an ever-present arbiter of daily life, and the nation never saw complacency as an option again.

War, to that point, had been part of American life, but now it became central. The US Army had been a few hundred thousand before the war… totally ineffective. That was never to happen again. US aircraft were not up to Japanese standards. That was never to happen again. Technology did not flow into the defense system from the private sector, but flowed outward. The Manhattan Project demonstrated what the state could create, and the microchip, the Internet, and computerized databases flowed out, to be turned into civilian products.

The national security apparatus remained at the center of American society, and the federal government, controlling that apparatus, gained overwhelming power. Perhaps most important, the pre-war illusion that war was marginal to our lives changed. The United States adopted a strategy of preemption or rapid response to any challenge—Korea, Vietnam, Iraq, Afghanistan, and Iraq again. And secrecy remained the veil over decisions that were made.

Some would object to this. They miss the point. Pearl Harbor happened. It is a dangerous world, and danger comes from unanticipated directions in ways that cannot be predicted. The United States did not create the world. The world created the United States, and it is what it is.

The simple act of dismantling the apparatus would not eliminate what we are afraid of. Denial of reality is not a strategy. And when 9/11 happened, everyone demanded to know how the president let it happen. Even with intense effort, the system will fail. But with no effort, the opportunities for disaster are endless.

Nevertheless, we must all be aware, 75 years later, of how the United States was permanently changed by a failure of imagination, a certainty of security, and an unwillingness to acknowledge how capable the enemy is. It resulted in a culture of anxiety, whether about Soviet nukes or Muslim terrorists. The tendency, back then, to minimize the Japanese has led us to maximize our fears now. It isn’t an irrational stance, but it is an exhausting one. The United States is in a reality that it cannot escape, but if it recognizes what happened, it can reshape or perhaps mitigate it.

Pearl Harbor isn’t ancient history. It is something that lives in the American psyche and is embedded in our national institutions. It is the lesson we never think of… but can never forget. And as we place embargos on our next adversary, it is important never to forget Pearl Harbor. If we remember, at least a young lieutenant might learn to be constantly anxious, even if it is a Sunday morning.

___________________________

December marks the one-year anniversary of This Week in Geopolitics and Geopolitical Futures, the geopolitical forecastingcompany launched by my wife Meredith and me.

Thank you sincerely for your part in making 2016 exciting and rewarding.

One of our great pleasures of the past year has been getting to know all of the Mauldin Economics editors. John Mauldin and I have been good friends for more than a decade, and collaborating closely with the Mauldin family was the logical next step in our relationship.

Now, you have the opportunity to subscribe to the best of Mauldin Economics’ investment advisories and research services for one low price. Through December 13, you can claim Mauldin Economics VIP status and access six premium publications at a discount of up to 74%.

I said in the last issue of This Week in Geopolitics that the US is in the mood to panic. This is understandable, but not necessary. If you’re an investor, saver, or retiree wondering which way to turn to protect your finances, there are plenty of opportunities out there. With high-quality research, solid investment advice, and the help of extraordinary analysts, Mauldin Economics VIP presents one such opportunity.

Discuss This

Comments

Use of this content, the Mauldin Economics website, and related sites and applications is provided under the Mauldin Economics Terms & Conditions of Use.

Unauthorized Disclosure Prohibited

The information provided in this publication is private, privileged, and confidential information, licensed for your sole individual use as a subscriber. Mauldin Economics reserves all rights to the content of this publication and related materials. Forwarding, copying, disseminating, or distributing this report in whole or in part, including substantial quotation of any portion the publication or any release of specific investment recommendations, is strictly prohibited.
Participation in such activity is grounds for immediate termination of all subscriptions of registered subscribers deemed to be involved at Mauldin Economics’ sole discretion, may violate the copyright laws of the United States, and may subject the violator to legal prosecution. Mauldin Economics reserves the right to monitor the use of this publication without disclosure by any electronic means it deems necessary and may change those means without notice at any time. If you have received this publication and are not the intended subscriber, please contact service@mauldineconomics.com.

Disclaimers

The Mauldin Economics website, Thoughts from the Frontline, The Weekly Profit, The 10th Man, Connecting the Dots, Transformational Technology Digest, Over My Shoulder, Yield Shark, Transformational Technology Alert, Rational Bear, Street Freak, ETF 20/20, In the Money, and Mauldin Economics VIP are published by Mauldin Economics, LLC Information contained in such publications is obtained from sources believed to be reliable, but its accuracy cannot be guaranteed. The information contained in such publications is not intended to constitute individual investment advice and is not designed to meet your personal financial situation. The opinions expressed in such publications are those of the publisher and are subject to change without notice. The information in such publications may become outdated and there is no obligation to update any such information. You are advised to discuss with your financial advisers your investment options and whether any investment is suitable for your specific needs prior to making any investments.
John Mauldin, Mauldin Economics, LLC and other entities in which he has an interest, employees, officers, family, and associates may from time to time have positions in the securities or commodities covered in these publications or web site. Corporate policies are in effect that attempt to avoid potential conflicts of interest and resolve conflicts of interest that do arise in a timely fashion.
Mauldin Economics, LLC reserves the right to cancel any subscription at any time, and if it does so it will promptly refund to the subscriber the amount of the subscription payment previously received relating to the remaining subscription period. Cancellation of a subscription may result from any unauthorized use or reproduction or rebroadcast of any Mauldin Economics publication or website, any infringement or misappropriation of Mauldin Economics, LLC’s proprietary rights, or any other reason determined in the sole discretion of Mauldin Economics, LLC.

Affiliate Notice

Mauldin Economics has affiliate agreements in place that may include fee sharing. If you have a website or newsletter and would like to be considered for inclusion in the Mauldin Economics affiliate program, please go to http://affiliates.ggcpublishing.com/. Likewise, from time to time Mauldin Economics may engage in affiliate programs offered by other companies, though corporate policy firmly dictates that such agreements will have no influence on any product or service recommendations, nor alter the pricing that would otherwise be available in absence of such an agreement. As always, it is important that you do your own due diligence before transacting any business with any firm, for any product or service.